CAW and GM Negotiate in Wake of New Ford Contract

CAW avoids two-tier wages; gains commitment for new vehicles and Mustang, F-150, and Super Duty engines at Canadian plants.

The Canadian Auto Workers union is set to meet with General Motors of Canada officials May 8 to try to hammer out a new contract similar to an agreement inked with Ford of Canada.

The negotiations are startling for two reasons: timing and content. For starters, the current master agreements between the CAW and each of the Big Three do not expire until September, and the industry was shocked to learn of a new contract with Ford more than four months early. Second: the new pattern agreement that GM and Chrysler will be expected to follow avoids two-tier wages similar to those negotiated by the UAW last fall and viewed as a huge concession on the union’s part.

Advertisement - Continue Reading Below

Fiesty CAW president Buzz Hargrove had been hollering that his union would never agree to a permanent lower pay scale for new hires, but few took him too seriously in today’s tough climate, where the domestic carmakers continue to downsize in a bid to return to profitability.

But Hargrove and his team pulled it off, while agreeing to what they see as more palatable concessions. A new three-year contract has been ratified that calls for a freeze in base wages for three years, no cost of living increases for 15 months, and drops one week of vacation and some health benefits. There is what the CAW terms a “grow-in system” that starts new hires at a wage 30 percent below scale, but it grows to full scale after three years.

And Ford made a commitment to invest in a fourth vehicle to be assembled in Oakville, Ontario—our guess would be the Lincoln MKT, which is the cousin to the Ford Flex, itself scheduled to be built in Oakville alongside the Ford Edge and Lincoln MKX.

The Essex Engine Plant in Windsor, Ontario, will add a new, more fuel-efficient 5.0-liter V-8 gasoline engine, contingent on government funding to help offset the investment required. The modular engine would replace the long-serving 4.6-liter V-8. The new engine program is codenamed Coyote, and the three-valve V-8 would debut on the next-generation 2010 Ford Mustang, according to Ward’s Automotive Reports.

Here Comes the Boss

The Essex engine plant is also expected to supply crankshafts and head/camshaft assemblies for the new 6.2-liter V-8 Boss engine that has been in the works seemingly forever and will debut in the F-series. In addition to powering a high-performance F-150 such as the Raptor, the new 6.2-liter will replace the 6.8-liter V-10 in Ford Super Duties, Ward’s reports.

Advertisement - Continue Reading Below

All of which suggests GM will need to take the CAW seriously as it demands new investment for three Ontario assembly plants in Oshawa, Windsor, and St. Catharines, which seek future product promises.

Meanwhile, executives in the Glass House must be glad to have CAW negotiations behind them, leaving them free to concentrate on an attack on another front: billionaire Kirk Kerkorian’s Tracinda Corporation is in the process of buying up to 20 million shares to control 5.6 percent of Ford and grabbing headlines with recommendations the carmaker sell its Mercury and Volvo brands.

It is all eerily similar to Kerkorian’s failed attempt to orchestrate a merger of GM and Nissan/Renault a couple years ago, and Tracinda representative Jerry York’s call for GM to jettison the Hummer and Saab brands. Last year it was Chrysler that rebuffed Tracinda’s purchase attempts as part of the DaimlerChrysler divorce.